St. of Iowa Telacommun v. Fed. Commun. Comm'n, No. 99-1149

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Writing for the Court: Ginsburg
• Citation: 218 F.3d 756
• Parties: (D.C. Cir. 2000) State of Iowa and Iowa Telecommunications and Technology Commission, Petitioners v. Federal Communications Commission and United States of America, Respondents Bell Atlantic Telephone Companies, et al., Intervenors
• Docket Number: No. 99-1149
• Decision Date: 27 June 2000

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218 F.3d 756 (D.C. Cir. 2000) State of Iowa and Iowa Telecommunications and Technology Commission, Petitioners
v.
Federal Communications Commission and United States of America, Respondents
Bell Atlantic Telephone Companies, et al., Intervenors No. 99-1149 United States Court of Appeals FOR THE DISTRICT OF COUMBIA CIRCUIT Argued January 24, 2000
Decided June 27, 2000

On Petition for Review of an Order of the Federal Communications Commission

Michael D. Hays argued the cause for petitioners. With him on the briefs were Kenneth D. Salomon and J.G. Harrington.

James M. Carr, Counsel, Federal Communications Commission, argued the cause for respondents. With him on the briefs were Christopher J. Wright, General Counsel, Daniel M. Armstrong, Associate General Counsel, and John E. Ingle, Deputy Associate General Counsel. Catherine G. O'Sullivan and Nancy C. Garrison, Attorneys, U.S. Department of Justice, entered appearances.

Donald M. Falk, Michael E. Glover, Edward H. Shakin, Dan L. Poole, Robert B. McKenna, William F. Maher, Jr., Stephen L. Goodman, Richard White Jr., Michael S. Pabian, David Cosson, Lawrence E. Sarjeant, Linda Kent, Keith Townsend, John Hunter and Julie Rones were on the brief for intervenors. L. Marie Guillory and Lawrence W. Katz entered appearances.

Before: Ginsburg, Sentelle, and Rogers, Circuit Judges.

Opinion for the Court filed by Circuit Judge Ginsburg.

Ginsburg, Circuit Judge:

The State of Iowa and the Iowa Telecommunications and Technology Commission (collectively, Iowa) petition for review of a declaratory ruling by the Federal Communications Commission. The Commission held that the Iowa Communications Network (ICN) is not a common carrier and therefore not a "telecommunications carrier" within the meaning of § 254(h) of the Telecommunications Act of 1996, 47 U.S.C. § 254(h). Consequently, the ICN is ineligible for direct universal

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service support for the discounted telecommunications services it provides to schools, libraries, and rural health care providers. See Federal-State Joint Board on Universal Service, Declaratory Ruling, 14 F.C.C.R. 3040 (1999) (Declaratory Ruling).

Iowa raises two arguments in its petition for review. First, Iowa claims the Commission erred by determining that the ICN is not a common carrier. Second, Iowa claims that regardless whether the ICN is a common carrier, it is a "telecommunications carrier" within the meaning of the 1996 Act, and therefore is eligible for direct universal service support. To the extent the latter claim is not foreclosed by our recent decision in Virgin Islands Tel. Corp. v. FCC, 198 F.3d 921, 922, 925 (1999) (upholding as reasonable FCC's position that " 'telecommunications carrier' means essentially the same as common carrier"), it is foreclosed by the deference we owe the Commission's reasonable interpretation of the statute it administers, pursuant to step two of the analysis in Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984).

With respect to Iowa's first claim, however, the Commission failed to address Iowa's argument that offering services to all potential customers to whom the carrier, under state law, may provide services makes the ICN a common carrier for purposes of the 1996 Act. We therefore grant the petition for review and remand this matter to the Commission to consider Iowa's argument in the first instance.

I. Background

The Iowa legislature established the ICN in 1989 to provide heavily subsidized high-speed telecommunications services throughout the state, particularly to areas that may be under served by the local exchange carrier. The legislature did not, however, authorize the ICN to serve everyone in the state that could use its services; in particular, the ICN may not provide services to individuals or to most private businesses. Rather, the ICN may provide service only to "public and private agencies," Iowa Code 8D.11(2), defined as follows:

"Private agency" means an accredited nonpublic school, a nonprofit institution of higher education eligible for tuition grants, or a hospital licensed pursuant to chapter135B or a physician clinic to the extent provided in section 8D.13, subsection 16.

"Public agency" means a state agency, an institution under the control of the board of regents, the judicial branch ... a school corporation, a city library, a region allibrary ... a county library ... or a judicial district department of correctional services ..., an agency of the federal government, or a United States post office which receives a federal grant for pilot and demonstration projects.

Iowa Code 8D.2(4)-(5).

Iowa Code 8D.9 further divides the class of "public and private agencies" into two subclasses. First, Certifying Users, which are institutions of higher education, area education agencies, and certain United States Post Offices, were required to certify by July 1, 1994 their intention to connect to the network. Any Certifying User that did not certify its intention by that date may not use the ICN without specific legislative authorization. Any Certifying User that did timely certify its intention to connect to the ICN must receive all its telecommunications services from the ICN unless it obtains a waiver based upon certain objective criteria specified in the statute. See id. 8D.9(2). Second, Preauthorized Users, which are all other...